BILL NUMBER: AB 1983	CHAPTERED  09/07/00

	CHAPTER   323
	FILED WITH SECRETARY OF STATE   SEPTEMBER 7, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 5, 2000
	PASSED THE SENATE   AUGUST 10, 2000
	PASSED THE ASSEMBLY   APRIL 24, 2000
	AMENDED IN ASSEMBLY   APRIL 10, 2000
	AMENDED IN ASSEMBLY   MARCH 29, 2000

INTRODUCED BY   Assembly Member Kuehl

                        FEBRUARY 18, 2000

   An act to amend Section 10100.2 of the Insurance Code, relating to
insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1983, Kuehl.  FAIR Plan:  brush hazards.
   Existing law provides for the creation of the FAIR Plan, under
which all insurers licensed to write basic property insurance
participate in an industry placement facility to administer a program
for the equitable apportionment among those insurers of basic
property insurance for persons who are unable to obtain that coverage
through normal channels, as specified.  Existing law provides that
insurers that voluntarily write basic property insurance in
designated brush hazard or inner-city areas will be proportionately
relieved of the liability to participate in the FAIR Plan.
   This bill would provide that if the reason for imposing a brush
surcharge under a FAIR Plan policy is solely because an adjacent
property owner is not in compliance with specified brush clearance
requirements,  the brush surcharge shall instead be imposed on the
policy of that adjacent property owner, as specified.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  It is the intent of the Legislature, by enacting this
act, to remedy a situation in which a FAIR Plan policyholder has
complied with the requirements for brush removal but is surcharged
solely based on brush existing on a neighbor's property that the
neighbor refuses to remove.  It is the intent of this act, therefore,
to shift the cost of noncompliance with brush clearance requirements
entirely to the noncompliant neighbor, as long as that neighbor is
also covered by the FAIR Plan.
  SEC. 2.  Section 10100.2 of the Insurance Code is amended to read:

   10100.2.  (a) (1) Rates for the FAIR Plan shall not be excessive,
inadequate, or unfairly discriminatory, and shall be actuarially
sound so that premiums are adequate to cover expected losses,
expenses and taxes, and shall reflect investment income of the plan.
If the plan returns premiums to members annually, the rates shall
not include any component relating to surplus enhancements.
   (2) If the FAIR Plan policy of a property owner would be subject
to a brush surcharge solely because of an adjacent property owner's
failure to comply with applicable laws, ordinances, and regulations
regarding brush clearance requirements, the surcharge shall instead
be imposed on the policy of the adjacent property owner if the
adjacent property is also insured through the FAIR Plan.
   (b) Rates for a policy of earthquake property insurance issued by
the association shall be established based on the best available
scientific information for assessing the risk of earthquake loss.
Factors that the association shall consider in adopting rates
include, but are not limited to, the following:
   (1) Location of the insured property and its proximity to
earthquake faults and to other geological factors affecting the risk
of earthquake.
   (2) The soil type upon which the insured dwelling is built.
   (3) Construction type of the insured dwelling.
   (4) The presence of earthquake hazard reduction factors as defined
in Section 10089.2.
   (c) Notwithstanding Section 10097, all information considered by
the association in establishing rates shall be public records.
   (d) The classification system established by the association for
policies of earthquake property insurance shall not be adjusted or
tempered in any manner to provide rates lower than are justified for
classifications presenting a high risk of loss, or higher than are
justified for classifications presenting a low risk of loss.
